Arizona’s New LLC Law Effective 9/1/19Richard Keyt2023-10-24T10:24:51-07:00
by Arizona LLC attorney Richard Keyt who has formed 9,000+ Arizona LLCs
On April 10, 2018, Arizona Governor Ducey signed SB 1353, a law that repeals Arizona’s current LLC law that became effective in 1992 and replaces that law in its entirety with the new Arizona Limited Liability Company Act (ALLCA) on September 1, 2019. All Arizona LLCs (existing LLCs and LLCs created in the future will be subject to ALLCA.
I have written an number of articles about the new law, which has many flaws and problem provisions. Below is a list of my articles on the new ALLCA. I encourage you to read the articles so you can learn about the problem provisions in the new ALLCA and what you must do to neutralize these problem provisions.
What You Need to Know About Arizona’s New LLC Law
ALLCA applies to all Arizona LLCs created after August 31, 2019.
ALLCA applies to ALL Arizona LLCs after August 31, 2020, when existing Arizona LLC law is repealed.
All LLCs need an Operating Agreement that: (i) contains language that complies with the new law, and (ii) eliminates the many liability creating provisions contained in ALLCA.
If you form an LLC before September 1, 2019, its Operating Agreement needs to have language that complies with current Arizona LLC law and that automatically complies with new LLC law after August 31, 2020.
If you have a multi-member LLC it is imperative that the members of the LLC adopt an ALLCA compliant Operating Agreement to eliminate the many liability creating provisions in ALLCA. See the articles below to learn about why I call ALLCA the liability company act and how a good Operating Agreement can change ALLCA back to the limited liability company act.
Warning: For the first time ALLCA levies fiduciary duties on members and managers of Arizona LLCs. New duties means new grounds on which members can sue each other and sue managers. My nickname for ALLCA is the Arizona liability company act because ALLCA creates many new ways that members and managers can be sued and become liable for money damages. Almost all of the new duties on members and managers can be eliminated with a good ALLCA compliant Operating Agreement.
Bottom line: If you have an existing Arizona LLC or will form an Arizona LLC in the future your LLC needs an Operating Agreement drafted to comply with ALLCA by modifying some problem provisions and eliminate entirely other problem provisions.
Two Ways to Get an ALLCA Compliant Operating Agreement
1. If you do not yet have an Arizona LLC: Hire me to form your new Arizona LLC by calling me at 480-664-7478 or completing and submitting my online LLC formation questionnaire.
2. If you have an Arizona LLC: Hire me to prepare a new or an amended Operating Agreement for your existing Arizona LLC by completing and submitting my onlne LLC Operating Agreement questionnaire.
Subscribe to Our Free ALLCA Email List to Learn about Arizona’s New LLC Law
Why LLCs Must Have an ALLCA Compliant Operating Agreement: Reason #3. New LLC Law Warning: Majority in Interest Nightmare. The definition of the term “majority in interest” in ALLCA could create major economic problems for multi-member LLCs that don’t fix the defective definition of majority in interest contained in ALLCA. This is a potentially serious economic problem for multi-member LLCs that don’t fix the problem in the LLC’s Operating Agreement.
Why LLCs Must Have an ALLCA Compliant Operating Agreement: Reason #1. New LLC Law Warning: Beware of Section 29-3404.A. Every multi-member Arizona LLC that wants to make distributions to members based on their percentage ownership of the company needs to adopt an ALLCA complaint Operating Agreement that eliminates the ALLCA requirement that all distributions to members be equal.
Option 2: Purchase a Custom Operating Agreement: If your Arizona LLC's Operating Agreement was drafted for the obsolete Arizona LLC law or if it doesn't have an Operating Agreement its members should hire us to draft a custom Operating Agreement by submitting our online Operating Agreement questionnaire.